Sabic Slumps to Three-Month Low as Profit Declines: Riyadh Mover

April 20 (Bloomberg) -- Saudi Basic Industries Corp. fell
to the lowest in more than three months after the world’s
biggest petrochemicals maker reported a decline in profit.

The shares dropped 0.8 percent to 90.50 riyals, the lowest
since Jan. 1, at the 3:30 p.m. close in Riyadh. The stock had a
six-day losing streak, the longest since September, after the
company’s units reported results that missed estimates. Saudi
Basic, also known as Sabic, has the second-biggest weighting on
the benchmark Tadawul All Share Index, which rose 0.5 percent.

Sabic, which said last week it plans to cut 1,050 jobs and
close some plants in Europe, reported a 10 percent drop in
first-quarter profit as production and sales at its units
declined because of maintenance work. Sales fell 3.3 percent to
46.74 billion riyals ($12.5 billion).

“Second-quarter earnings depend on oil prices and
performance of plants,” Chief Executive Officer Mohamed Al-Mady
told reporters in Riyadh today. “The financial situation
worldwide is fluctuating also, hence we can’t tell how we will
perform during the rest of this year.”

European Challenge

Sabic joined peers including Akzo Nobel NV and BASF SE in
scaling down operations that are taking the brunt of a prolonged
slump affecting construction and infrastructure as well as
consumer spending on cars and appliances. The company in 2007
bought General Electric Co.’s plastics unit for $11.6 billion as
part of a global expansion drive.

“The European market is facing structural changes that are
likely to set a new course for future competitive challenges,”
Sabic said last week. “Our industry continues to face slow
growth.”

The company, based in Riyadh, also faces stiffer
competition from a revived U.S. chemical and plastics industry
that’s benefiting from shale gas supplies, as well as increased
production among Asian peers seeking to satisfy their demand
locally. The government of Saudi Arabia, the world’s biggest oil
exporter, is Sabic’s biggest shareholder.